All about faceless income tax assessment and how it works

In order to facilitate faceless assessment, the Central Board of Direct Taxes (CBDT) would set up ‘centres’ and ‘units’ and specify their respective jurisdictions, explained tax experts during a webinar Faceless Assessment and Appeal, a Roadmap for Fearless Tax Regime.

A National E-Assessment Centre would facilitate and centrally control e-assessment proceedings and Regional e-Assessment Centres would be under the jurisdiction of the Regional Principal Chief Commissioners for making assessments, said Mukesh Patel, a tax consultant.

There would be ‘Assessment Units’ for identifying points or issues, material for the determination of any liability (including refund), analyzing information and other functions. ‘Verification Units’ would be for enquiry, cross verification, examination of books of accounts, witnesses and recording of statements and other functions.

In the faceless assessment ecosystem, ‘Technical Units’ would be present for technical assistance including any assistance or advice on legal, accounting, forensic, information technology, valuation, audit, transfer

pricing, data analytics, management, or any other technical matter.

‘Review Units’ would review the draft assessment order to check whether the facts, relevant evidence, and law and judicial decisions have been considered in the draft order.

All communications between the units and with the concerned

taxpayers, for the purpose of making an assessment under this scheme, would only be through the National e-Assessment Centre.

On assignment of a case, the Assessment Unit may make a request to the National e-Assessment Centre (NeAC) for obtaining information, documents or evidence from the taxpayer. Enquiry or verification would be conducted by the Verification Unit, and technical assistance would be provided by the Technical Unit.

"Upon a request being made by the Assessment Unit for any documents or

evidence, the NeAC shall issue appropriate notice or requisition to the taxpayer or any other person for obtaining the same," Patel said in the presentation.

The Assessment Unit shall, after taking into account all the relevant material, pass a draft assessment order either accepting the
returned income of the taxpayer or modifying the returned income of the

taxpayer, as the case may be, and send a copy of the order to the NeAC.

Any unit may, in the course of assessment proceedings, for non-compliance of any notice, send recommendation to the NeAC for initiation of any penalty proceedings under the Income Tax Act.

"The NeAC shall, on receipt of such recommendation, serve a notice on the taxpayer. The response to the show cause notice would be furnished by the taxpayer and shall be sent by the NeAC to the concerned unit which has made the recommendation for penalty," according to the presentation.

The said unit shall, after taking into consideration the response furnished, make a draft order of penalty and send a copy of such draft to the NeAC, and then drop the penalty after recording reasons, under intimation to the NeAC.

The NeAC shall levy the penalty as per the said draft order of penalty and serve a copy of the same along with a notice for demand on the taxpayer.